The shareholders’ agreement

Published on January 05, 2026

A shareholders’ agreement remains one of the most important tools for ensuring the stability of a corporation. It reduces potential conflicts and clarifies the rules before problems arise. It also protects the interests of each shareholder and facilitates day-to-day management. Our firm can help you draft, review, or update a shareholders’ agreement so that it aligns with your business objectives and applicable legal requirements.

Réunion entre professionnels autour d’une table, illustrant la négociation d’une convention d’actionnaires.

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Why sign a shareholders’ agreement? When? What should it contain?

These questions often arise when a business is created. Indeed, a shareholders’ agreement primarily serves to ensure internal stability and prevent conflicts. It also sets the rules between owners before problematic situations arise. Thus, the shareholders’ agreement becomes an essential tool for structuring the business and protecting each partner.

Why sign a shareholders’ agreement?

A shareholders’ agreement allows you to define several essential elements :

  • How decisions will be made
  • Who may invest or become a shareholder
  • The involvement of each party in management
  • What happens in the event of death, incapacity, or departure
  • In which situations a person must sell their shares
In summary, each shareholder accepts certain limits, and so do the others. This reduces the risks of unilateral actions and protects the business from unpredictable decisions. In addition, a shareholders’ agreement strengthens trust among partners.

When should it be signed?

You can sign a shareholders’ agreement :

  • Before starting the company
  • After, once the company is operating
  • Even later, by renegotiating among current shareholders
However, it is always easier to negotiate an agreement when things are going well. In times of crisis, discussions become harder and less objective. A shareholders’ agreement should ideally be adopted from the outset.

What should a shareholders’ agreement contain?

Each business is different, but most agreements address the following elements :

Decision-making

You can determine how important decisions will be made
  • Majority decisions
  • Decisions requiring two-thirds of the votes
  • Decisions requiring unanimity
Examples : expelling a shareholder, merging, changing the head office location, approving major expenses, etc.

Admission of new shareholders

You may restrict the entry of new partners, for example :
  • Prohibiting the sale of shares to anyone who is not already a shareholder
  • Professional or financial criteria to become a shareholder
Death, incapacity, or disability

Without an agreement, an associate’s heirs may become your new partners… sometimes against your wishes. This can create serious conflicts.

The agreement may provide for the automatic sale of shares in the event of death or incapacity, based on a predetermined mechanism.

Dispute resolution

To avoid litigation, the shareholders’ agreement may provide for :
  • Mediation, arbitration, or other internal mechanisms
  • Tie-breaking procedures (e.g., forced buy-out, mandatory sale)
This protects shareholder relationships and ensures the continuity of the business.

Conflicts of interest, non-competition, and confidentiality

The agreement may prohibit :
  • Direct or indirect competition
  • Solicitation of clients or employees
  • Disclosure of confidential information
Share sales and exit strategy

The agreement may provide :
  • Restrictions on share transfers
  • Right of first refusal
  • Tag-along rights (protecting minority shareholders)
  • Drag-along rights (useful when selling the company)
  • Share valuation methods (often by an independent expert)
These clauses protect against forced sales, imposed new partners, or disputes during a departure.

Governance and day-to-day management

The agreement may also specify :
  • The composition of the board of directors
  • The powers reserved for directors or shareholders
  • The dividend policy
  • Access to information for each shareholder

The unanimous shareholders’ agreement

There is a particular type of agreement : the unanimous shareholders’ agreement (USA).

Signed by all shareholders, it allows them to :

  • Withdraw certain powers from the board of directors
  • Transfer these powers directly to the shareholders
Attention :
  • Directors have a fiduciary duty to the corporation.
  • Shareholders do not have such a duty.
This distinction must be taken into account when drafting a USA. It becomes essential when shareholders are also directors.

In summary

A shareholders’ agreement allows you to :

  • Prevent conflicts
  • Structure governance
  • Protect each party’s interests
  • Organize exits or share transfers
  • Plan for delicate situations (illness, death, disputes, competition)
In short, it is an essential document for the stability of any corporation, regardless of its size.

If you wish to draft or review a shareholders’ agreement, our team can assist you. This ensures that it reflects your business objectives and protects each partner.

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